Locus' Second-Round Financing Attracts $43M for Protein Work
Wednesday, November 29, 2000
By Kim Coghill
In its second round of financing in little more than a year, Locus Discovery Inc., a privately held computational chemogenomics company, raised $42.75 million in a private round of equity financing through the issuance of preferred stock.
The Princeton, NJ-based company was formed in September 19999 as an outgrowth of the work of Frank Guarnieri, group head of Bioinformataics and Biophysics at Princeton-based Sarnoff Corp. International. In its first round of financing a year ago, Locus raised $5 million based solely on the investment of Prism Venture Partners, of Westwood, Mass., according to Nicholas Landekic, Locus president and CEO.
The latest round gives Locus $44 million in cash, which is earmarked for expanding the staff and advancing the company's technology and drug discovery programs. Locus currently has seven full-time employees and is paying for 10 contract people at Sarnoff.
"Our plans are to hire at least a couple of dozen employees - chemists, biologists and software engineers 0 and we also plan to increase the capacity of our supercomputer by 10-fold," Landekic said.
The financing was lead by Cooper Hill Partners LLC, of New York. Other participants were Prism; INVESCO Global Health Sciences Fund, of Denver; Dresdner Klienwort Benson, of London; Delphi Ventures, of Menlo Park, Calif.; Johnson & Johnson Development Corp., of the UK and New Brunswick, NJ; Tredegar Investments, of Seattle; and Origin Capital, Amerindo Investment Advisers and ReqMed Co., all of New York.
"I feel very flattered and truly complimented by the response I got from investors in this financing," Landekic said. "The round was actually vastly over-subscribed. I had written commitments for over $120 million of investment in the round, which I took as a tremendous compliment. I think what is so attractive about Locus is what we have - to be able to computationally design compounds for protein targets - to be able to do in a couple of weeks what now takes many years."
The technology is a proprietary means of rapidly and accurately identifying the biologically relevant active binding site of a protein, and then designing small-molecule antagonists or agonists of the protein's activity. The technology utilizes proprietary analytical procedures and a specially built supercomputer and requires knowledge only of the structure of a protein.
Unlike traditional research approaches, the Locus process represents the ability to compress into a few weeks what previously took several years in the drug discovery process.
Locus intends to develop research collaborations and currently is engaged in such a contract with Aventis Pharma, the pharmaceutical arm of Aventis SA, of Frankfurt Germany. The collaboration is focused on developing therapeutic compounds for three protein targets selected by Aventis. If all three targets result in compounds being developed to the point of product approval, the collaboration will be worth up to $79 million.
Landekic said the company's drug discovery program also stands to benefit from the financing. "We intend to add additional drug discovery projects now that we have funding and we are taking a look at options. There are many different protein targets we can work on and we are in the process of deciding which would be the best ones to work on."
The company's current primary focuses are its small molecule erythropoetin mimetic program and GP41 inhibitors.
Erythropoetin, a product used in cancer therapy, is a protein that must be administered by intravenous injection. Locus Discovery has synthesized and tested noval small-molecule mimetics of erythropoetin, which are being designed to enable easy oral administration.
GP41, a novel antiviral target, is a highly conserved structural protein found in many envelope viruses, including HIV, influenza, rhinoviruses and Ebola. A compound that inhibits GP41 assembly could potentially be a useful therapeutic agent for a wide range of viral diseases. Locus has designed novel potential antiviral small-molecular compounds that target GP41.